Tax Filing, Deductions, Credits & Changes: Tax Compliance Considerations for Small Business Owners - Mission to Grow - Episode #91

Janel Weinke: I think sometimes when, you know, you have other goals in mind, you think this is, I just, I paid my employees, I paid my employees. But it's very, very important that if you, if you're not using a tax software or payroll software to be able to store that information from you, that you keep your records very clean and up to date as possible. Payroll Tax Compliance for Small Business Owners, Tax Filing, Tax Credits, Payroll Deductions, and more. Hi, I'm Mike Fennoy, host of Mission to Grow, and a really good show today. I think this is super practical. I think most business owners, managers of small and mid sized businesses, You know, I think they understand the basics, uh, but sometimes we get lost in the complexity, whether something is, say, a pre, uh, pre tax deduction or a post tax deduction, what kind of credits are available out there.

Mike: And really one of the important things to stay out of trouble with the IRS and your, your state and local municipalities. And I can't imagine a better guest to unpack this topic. Uh, uh, my guest today, she's got more than 15 years experience in payroll tax filing. She's passionate about people's growth and building her team into tax experts.

Uh, she and her team, they work every day with small business owners, large enterprises and other payroll companies. Uh, they also work with tax filing agencies, talking every day to the IRS, state and local municipalities. Please welcome to the show, our Senior Director of Tax Operations, Ed Assure. Janelle,

Janel Weinke: Thank you, Mike. Thank you for having me. I look forward to having this discussion with you. It's a really good topic.

Mike: so Janelle, right from the jump. Um, I, I, I think people probably just assume, okay, uh, I, I, I get a paycheck, taxes come out. There's a heck of a lot that goes actually into that. What's the one thing that especially small business owners really need to understand about payroll taxes? If they're gonna try to grow their business?

Janel Weinke: The one thing is to pay and file on time. That is the one thing to always remember is you want to pay and file on time. and there's a lot of resources and a lot of things when you register and be able to have employees around all the states and all the localities, but you want to file and pay on time.

Mike: Okay, so that, that's, that sounds obvious, but what are, what are the, what are some of the roadblocks that get in the way? How often is it that. That small business owners don't file on time. I think most people file because they're going to get a knock on their door if they're not, but what, what are the things that prevent people or accidentally not filing on time?

Janel Weinke: I think the biggest thing is for small business owners is, is the unawareness of when do I need to pay? When I need to file? So a lot of times it's not done purposely not to file and purposely not to pay on time. It's because of the unawareness and when and how do I file and pay? So there, like I said, there's a lot of resources that They can use, as soon as you register, when you have employees in the multiple state agencies or localities, you're going to get a document that's going to indicate exactly when you need to file and when you want to pay.

And you want to keep those records because it's going to be really important on when you need to pay and file. Most of the filings that are due, they're going to be due quarterly. So it's like mark your calendars that you're going to pay and file, well file, um, quarterly.

Mike: So, uh, quite literally, uh, people probably don't realize that just in the US alone, there's more than 14, 000 taxing jurisdictions. Um, we think federal, we know state, but it gets really, really complex down at the. You know, sometimes it's a city layered on top of a county, layered on top of a school district, layered on top of a township, whatever.

Right? So, so this goes real fast. Can you, and you can't tell us about all 14, 000, obviously, but can you just kind of take us through the basics? Uh, at least from Fed to State, what are the typical timeframes, what are the typical windows of when do periods end and when, when must taxes be filed by?

Janel Weinke: Yeah, so for year 941, um, those are going to be due quarterly. So, for example, Q1 was going to be due on April 30th. Um, and then when you, if you don't have less than, um, a certain amount of threshold and you don't meet the 1500 threshold, you would be an annual filer and that would be due on January 31st of the following

Mike: back up, what does that mean, a 1500 threshold?

Janel Weinke: Yeah, it would be your liability amount, your payroll liability amount, and that if you don't meet that threshold, you could become an annual filer. And it also,

Mike: that's 1500, 1500.

Janel Weinke: that is correct.

Mike: So if you're a real small employer, you're a solopreneur, you have just a very small amount of Uh, W 2 Labor that, that if your threshold is small enough, you may only have to file once a year. How will you know? If you didn't watch the show, how would you know the difference?

Janel Weinke: You would know the difference by when you register for your entity, it's going to ask you those specific questions, like how much do you expect your payroll liability to be? Um, how many employees you have? And so as soon as the IRS provides you your FEIN number, your federal ID number, it's going to tell you exactly when you need to file.

And if you meet that threshold, like we mentioned, um, then you would be Go ahead and be able to do an annual filer. Again, um, it doesn't hurt if you just file a quarterly filing. you can file quarterly that 941, return. but again, if you don't meet the threshold the IRS would expect an annual return from you.

Mike: So most businesses, certainly most small businesses, file quarterly. 941 is just simply the name of the tax return. Um, is there a threshold higher than that where you would need to file more frequently than quarter if you're a

Janel Weinke: No, you're always going to file that 941 return. That is for all businesses. That that is the only tax return that you would need to file for unemployment taxes.

Mike: So, so anybody watching, if you're an employer, you have W 2 employees, that's not freelance contractors, 1099 employees, there's a whole different podcast episode on how to properly classify those, but we'll assume everybody's got that classified right. If it's a W 2 employee, below 1, 500, you're probably an annual filer, but even whether you do or don't meet that threshold, based on how you registered your federal ID, The IRS will tell you whether you're annual or quarterly.

So do I have this right, Janelle, that like I might register my federal ID number, my EIN, and say, uh, Hey, I expect X number of employees and Y number of wages. And therefore puts me over the top that I'm going to be a quarterly filer. And for whatever reason, my business is just kind of slow to get out of the gates and I'm struggling and I don't have it.

And so I'm like, Oh, I'm under 1500 bucks. I'll just file annual. That's still a big no, no, because they,

Janel Weinke: That is 100 percent a thank you, Mike. Thanks for calling that out. That is a big no no. So, once you file that 941 return, the IRS is going to expect that you're going to file the next quarterly return as a 941. So, you can't flip flop. You have to, if you're going to file a 941, regardless of the threshold, you do need to remain on the 941 filing schedule Now, if you don't have any liability because, for the next quarter, then you would be required to file a 0 941 return. If you do not file that 0 941 return, you will get an IRS notice from the agency requiring that they're missing a tax return, which can create some penalty and interest if you do not file on time.

Mike: yeah. And I don't want to jump ahead too much to like consequences of not doing this stuff right. But, but quite literally you could, I could see, uh, you know, we give business owners the benefit of the doubt because they just don't know this kind of stuff. Right. So you start a new, new entity. Um. You fill out your paperwork to get your new federal ID, um, and it's, they, it spits out and says, Hey, you're going to be a quarterly filer.

Every quarter you're going to file a 941 employer tax return. Done. You're like, okay, uh, that was great. Uh, we had, we had a good Q1 and now Q2. Oh, things got really slow. Maybe we're seasonal. I have no liabilities. As you say, that basically just liabilities equals how much you own taxes. So I have zero liabilities.

Ah, I just won't file this month. You're gonna get fined and penalized for not filing, but it's way worse than just a fine because the IRS, they have no idea that you had a down quarter. They have no idea that you're seasonal. They just assume you're not paying your darn taxes and they could literally put a levy on your business.

For not paying taxes, even though you technically didn't owe any. I'm not overstating that am I?

Janel Weinke: No, you're not overstating it. Even if there was not an intent that you just didn't want to file or you forgot, it's really important that if you do not remit that zero tax return, um, that you will receive a tax agency notice. And it's important that when you get that tax agency notice, because in the situation, if you do forget, um, for, to filing that zero return, it's important that you respond to the IRS.

directly with providing a detailed letter explaining why you did not file on time. In most cases, the IRS is willing to take a first time abatement. So you definitely want to take that approach if you do get into that situation. Um, you can also contact the IRS. I know when you get those notices in the mail and it kind of scares you with internal revenue services, but it's okay to call them.

They are there to help you. They're also willing to negotiate on what was the Cause of you not filing something on time.

Mike: Yeah, so so let's define the word abatement That's a that's an everyday lexicon for a tax person like you. The average entrepreneur might not know what that means So what is an abatement? And then let's talk about you know I want to explore more about actually talking to IRS agents because that sounds scary as hell,

Janel Weinke: Yeah. No, it could be, especially when you, you know, you get that, you just want to ask a general question and it almost feels like you're probably at the dentist or something and you have to take a tooth out and you have to all talk to them. And sometimes it feels a little overwhelming, but I promise, you know, if you don't get a the right agent to be able to partner with you or ask the right questions, I would hang up and call them right back and get the right agent.

Um, but the abatement request is, um, traditionally the IRS needs a written correspondence to them. They need something to be mailed to them explaining the situation. Um, it could be the first notice that you received. Even if you get levied, you can go ahead and ask the IRS for an abatement for that levy if you get to that process.


Mike: abatement is just simply a negotiation. So either they'll give the entire fine. So, so maybe, maybe you still owe the taxes, but maybe they'll remove the fine or maybe they'll split it in half. It, it, all it means is a negotiation, a reduction of fines or fees. Right.

Janel Weinke: correct, correct, and that you're requesting them to remove them. That is the, that is the request and that is the ask to the IRS. That's the ask. Like, I want you to remove this. This wasn't an intentional action by you or your company to not pay something or file something on time. So you want to be able to provide all the supporting documentation on the reasonings of why you did not file something on time.

In most cases, the IRS will take your one time abatement. The IRS does have a one time abatement request that they allow all entities The first to first submit that request. Um, so if you haven't used that for any reason in your entire entity of your FEIN, your company, you do have the, that one time request from the IRS.

Mike: Yeah. And I think, I think we would just, we couldn't encourage folks enough that, um, you, might hate taxes. You might love taxes. It doesn't matter. Don't ignore your problems,

Janel Weinke: No,

Mike: ignoring, IRS notices. It will end badly. There, is, there's no if, ands or buts about it, but I think most people are shocked at how just genuinely friendly these people can actually be and how helpful they can actually be.

These are human beings on the other end of a phone who are used to being lied to and avoided. And they, I think they find it just as refreshing as you might when they actually are dealing with someone who's honest and open and communicating with them and working a plan, right?

Janel Weinke: Definitely, definitely. I think, you know, calling them directly, sometimes you can get the immediate action. Um, the hold time can be excessive at times, especially at the beginning of the year. However, if you have the time, I would say they probably average a 45 minute hold time. Um, but Anytime that you do maybe a written correspondence to the IRS, I definitely would recommend to send it with a tracking of that information being sent to the IRS so that you have proof that you sent that because at times the IRS can take almost eight weeks to open that correspondence that you sent.

And, uh, while you are there reviewing what you sent, potentially they're going to send another notice. So, in that situation, you want to send everything with tracking if you're going to send a correspondence. You can't get on the phone with the IRS.

Mike: That's really well said. And this, this became a huge issue during the pandemic, right?

Janel Weinke: Oh, yes.

Mike: Because just, we would know just, just firsthand where IRS staff wasn't necessarily going to the office at the, certainly early in the pandemic, you might get a notice that is a simple question. Maybe the IRS was wrong about something.

They sent you a notice. Hey, you made a mistake and you didn't. And we would notify the IRS. No, this isn't a mistake. And here's the proof.

Janel Weinke: Mm hmm. Yep.

Mike: inbox unopened, right?

So audit trail is so, so, so important here. Get the time, date, stamp, and everything that you're sending to these folks and communicating. And, and like I said, they're good to work with. They'll admit it when they're wrong. And if you have a good fact pattern, it'll, it'll all be good.

Janel Weinke: Yeah, just keeping records of everything is going to be really important. And the IRS may feel like they're not your friend, but I promise there is IRS agents that will be able to work with you directly over the phone too.

Mike: Yeah. Yeah. Great. All right. So, so really two big, two big forms that we talk about 941. So, so for folks who Uh, outsource their payroll to somebody like Assure or, or, or another firm, or maybe they do it in house themselves, uh, QuickBooks or some other, other software, you're filing the 941. Uh, there's another form, a 941.

Janel Weinke: the 940. Oh, uh huh, uh huh.

Mike: Explain to folks what the 941X is because taxes can be scary and sometimes you make a mistake. What happens if you make a mistake?

Janel Weinke: Yeah, so anytime in the situation you make a mistake on either overstating or understating, understating the liabilities on your original 941, the IRS has a 941X. And this 941X tax return is what is called an amended return to the original 941. Now, the 941X only can be submitted via paper. There's no electronic current version that you can go log into the IRS website.

Um, there isn't anything that you can, um, use even through a third party to submit it. Um, it, the only way of submission to the IRS is through paper. Now, in that situation, it's going to ask you what were your before figures. and what are your actor figures. And then it's going to give you a box on the last page before you sign it to explain why you are adjusting what you did.

So in the situation you don't need to um, go into specifics and list out your employee because you have to remember the 941 and the 941x doesn't have any employee information. It is basically employer taxes, employee taxes. So you don't need to list like employee information. All you can say is that you understated the taxes, for this tax period and you have notified your appropriate employees.

You don't need to list any of your employee information in that. When you submit that to the IRS, again, like I said, just when you correspond anything to the IRS, send them a tracking as your proof of sending something to the IRS. And if in the case that you do a 941X to reduce your taxes, once the IRS receives that 941X, you should expect a refund.

So that's the good news, right? So if you have paid all those taxes originally on time and you are decreasing the liability, um, you should expect an actual refund from the IRS and the IRS will issue that refund to you, um, approximately six to 12 weeks. Um, however, it does take time, um, you know, sometimes through snail mail, it does take time for the IRS to open and so forth, but the 941X is correcting the original 941.

Mike: Yeah. Okay. Very good. And there are, there are technically plenty more options, whether it's, uh, ag and nonprofit type forms and whatnot. But for the, for the most part, we're talking to 941 is what you file every quarter. And there's no cap. So you might be an annual filer if you're, if you're real small, but most people are filing quarterly.

And even if you become a big corporation, you're wildly successful. You're still filing

Janel Weinke: always going to file a 941. Yep.

Mike: 941X is your mechanism to make changes. Um, let's maybe move to the state level. Uh, how, how much in common do states have? Do they generally follow the same timeline? Are there outliers that people need to be aware of?

Janel Weinke: Yeah, so you have state withholding and you have state unemployment. Um, and there's some other paid family leaves and so forth. But if we want to stick on state unemployment, they're very common to when you actually remit a tax return, that those are due quarterly. Um, there is one agency, Illinois State Unemployment, that requires monthly wage details.

However, the quarterly tax return that is due Needs to be submitted to all of the state agencies will be due quarterly. So if we're looking at first quarter, 2024, that always remember first quarter, it'll always be due on April 30th. And then for state withholding, the state withholding, um, they do have quarterly reconciliations, but depending on your, um, payment frequency, you can pay based on you submitting an.

an actual tax return to at that time. So if your pay frequency for withholding is monthly, semi weekly, um, you would need to actually remit an, a tax return in addition to that tax payment.

Mike: all right, so let's, I want to be clear on that. So, for, we're talking unemployment, right? So, unemployment, unlike your federal employer taxes, FICA, which you file and pay quarterly, so if end of, last day of March is the end of the quarter, it's the last day of April is the due date to have both file and pay.

For state, it's going to be a little bit different. It's most of them are quarterly. You said Illinois is monthly, but most are quarterly for filing for unemployment. But depending on your volume and, uh, the size of your payrolls and the size of your liabilities, you might actually have to pay more frequently than you file.

Do I have that right?

Janel Weinke: For unemployment, you're always going to remit quarterly, um, file and pay. So for state unemployment, you're always going to file and pay quarterly. Um, the only one, like I said, is Illinois SUI when they require the, um, wage detail. Um, but for state unemployment, you're always going to file and pay quarterly.

Mike: Is there any scenario where you're paying And filing at a different frequency, or are you always paying when you file?

Janel Weinke: Not for unemployment. For unemployment, you're always going to file and pay quarterly.

Mike: How about non unemployment? Other, other taxes?

Janel Weinke: Withholding. Yeah, withholding. You will have times where there's specific agencies that you're going to provide them a quarterly return, but you actually paid more frequently. So, agencies for state withholding, very similar to Fed, um, like

Mike: And state withholding is, you're just talking income tax,

Janel Weinke: Correct. Yeah, that's correct. Mm hmm. Yeah, you would pay the most common frequencies that state withholding have are going to be semi weekly or monthly and those payments are due based on the threshold and keep in mind though you can always um pay more frequently.

So, state withholding, because they do have that quarterly recon, that quarterly return that's due quarterly to, not a payment, but an actual return, you could pay more frequently. The state withholding will allow you to remit those tax monies before the actual due date. You're never gonna get penalized for remitting early.

I promise you that. But if you ever remit late, yeah,

Mike: They might struggle actually reconciling it and making sure that you don't have to keep, keep on paying until they figure out an allocator properly, but, uh, they'll take your money anytime, right?

Janel Weinke: yeah, definitely.

Mike: Alright, so we talked about Fed, um, and we didn't say it, but Federal, we're talking about Employer and Employee portions of Federal Income Tax, FICA, um, and now we're talking State, two different buckets, Unemployment.

Which is always quarterly, both payment and filing, but withholding by state, so income tax by state, this is frequently decoupled, where you're filing quarterly, but paying either monthly or maybe even by pay period, depending on the size of your liabilities. Do I have that right?

Janel Weinke: Yep, you 100 percent have that correct. Based on the liabilities, remember your payroll is always going to be your system of record, your Bible, your everything is going to relate how you're going to pay in a file based on your liability of your payroll.

Mike: Okay, anything else at the state level other than the two buckets? I mean, there's always exceptions, but so it's basically unemployment and Income tax withholding. Those are the two major buckets for states, right?

Janel Weinke: Yep, that is correct.

Mike: So now we get into crazy land Where you start layering in this county and this school tax and this township this municipality This work opportunity zone where there's a you know a tiny, you know, one block radius that they're doing this project You can't take us through all 14, 000, but, but help us get smart in a couple minutes on these state, these local and municipality taxes, how we should be thinking about them.

Janel Weinke: Yeah, so remember it's locals, all the localities. You've said it perfectly about, you know, having the school district, having link transmit, all of those where you live in, where you work in. Remember that. for Pennsylvania locals, we have the act 32. so if you're a small employer, you may be related to that, um, where you can have act 32 is where you can submit all your local Pennsylvania taxes to one local agency.

So that passed a couple of years ago. Um, however, keep in mind though for Pennsylvania and all of the other localities, what you need to be aware of is It's where they live and where they work and there's different taxes. And so it's always, it's always very important to know that your worker's address of where they work and where they live in, because those taxes are going to be specifically on how you're going to do those tax deductions on the payroll.

So keep those things in mind, because those are going to be really important. If there's anything you need to know about locals, it's where they live, where they work in, and there's different taxes, depending on what locality they're in. Pennsylvania, I think you're going to hear from most small business owners is There's so many little locals in Pennsylvania, and how can that be when you're not as big in the state, right?

But there is, it could be, you could be looking at, um, local, locals based on I live here, I work here, and I'm, I need to report in a different locality. So keep those things in mind, keep your employees address, um, current on where they live and where they work in, even in those projects, because that is going to be really important on how you handle those tax deductions when you're processing payroll.

Mike: And Janelle, tell me, tell me if I'm, I don't want to overstate this, but I think we're, we're, employers get in the most trouble here. So like, The IRS, they've, they've, they're, they've got a good process. They, there's, you, you, they let you know, you know, are you an annual or are you a quarterly filer? And they have good processes.

For the most part, states have their act together because it's a lot of businesses. And so they, you know, it's, the, the process is crystal clear. The technology and processes in the people aren't always as sophisticated at the local levels, right? And so, So it may be, it may be reasonable as a small business owner that you don't get notified.

Maybe it's your job to find out what these rates are. And sometimes it might not even be self evident how, but it's kind of like ignorance of the law is no excuse. You have to identify what these tax rates are. And like, if you're a, if you're a business to consumer, like a retailer, You know, you're, you're probably used to maybe each of your locations has a different sales tax rate.

That's that you just account for that at the register.

Janel Weinke: Mm hmm.

Mike: Where this gets really complex is maybe I'm, maybe I'm a small business. Maybe I only got, you know, 20, 30, 50 employees, but it's where the work is performed. So if some of those folks are virtual workers. They work from home. It's not where your business is located.

Like retail sales tax does. This is where the work is performed. So you could be a small business operating in one state and you think, okay, I have to pay my federal, I have to pay my state. You could still have lots of different locals that you have to file and pay taxes for, right?

Janel Weinke: That is correct. That is correct. So it's where the work is being done at and you got to keep that in mind because you don't want those surprises of those local agencies. Yes, they are. They sometimes they're the least agency to probably send a tax agency notice out to you. However, you should be. Be notified and you should be aware that if you have a small business and you are located in one state, but you have, um, the work is being done in another state, and then it has localities that you keep that in mind when you need to be able to file and pay.

The good news, though, is a lot of local agencies, um, you when you register with them, um, or if you use your, um. and a federal ID number. You can use that when you are remitting your filings and payments to those agencies. Um, other good news about them is there's only a handful of jurisdictions that are mandated to process electronically.

Um, and I call that good news because a lot of times when the, they know that they have, um, you know, employees working in specific areas, they're going to send you coupons of what you need to complete. It's probably like Three lines long. And all you're going to do is put the liability, what's the tax, what was withheld, and all you do is return it.

They even give you an envelope. Um, they give you those coupons and those are things that you want to keep. Um, when you, when you get those, they send them pretty frequently every October for the upcoming year and they'll send you all the forms for all the, for all the, for all the times that are due for that upcoming year.

Mike: And, and what, what are the types of forms that you must use to file locally?

Janel Weinke: Yeah, so, um, you're going to send out your EIT, LST, um, Earned Income Tax, um, type of forms that you need to submit. Literally, the returns are the easiest returns to complete. When you look at the 941, or you look at a state tax return, there's so many boxes, right? Uh, locals, um, like Mike, you alluded to earlier, they're not as technical as the state and federal agencies.

Um, there's probably as big as, the coupon is probably this big, very, very small. And you want to do the earned income tax return and also, um, those school districts if your employees fall within that. Um,

Mike: we move on to talk about tax credits, anything else that you think the, I mean, this is a very deep ocean, uh, payroll tax filing, right? We could, we could, we could go super deep on any of these topics. Any, any big concepts that you think we haven't touched that small business owners need to understand here?

Janel Weinke: I think the biggest thing is knowing is that your payroll is your system of record. Um, also knowing your tax deductions and you know, we want, we're going to talk about that a little bit more. But, um, and also registering with agencies. Once you have employees in those specific, um, tax agencies is to register with those agencies.

I think that is really important. And then you asked me at the beginning of this, what's the most. What's the one of the most things that they need to remember is make sure you file and pay on time. And in the situation you get that where you don't file and pay on time, contact the agencies immediately to provide them kind of more information on what occurred because most agencies will work with you.

Mike: You used a term that you and I and people in our space talk about every day, system of record. I don't know if the average entrepreneur knows what that means, but when you say payroll is the system of record, unpack that.

Janel Weinke: So I think the system of record is your payroll history. So even if you're not using a payroll system and you're doing things through, you know, QuickBooks, you're doing things through, um, you know, through an Excel document, cause some people still use those things. Um,

Mike: thing you've got to stop is, you know,

Janel Weinke: Yeah, yeah. So remember that any data related to payroll is your system of record and you want to gather that information and make sure that it's up to date, um, either when you're processing your payroll or you're making any corrections, whatever it is that tells you exactly the employees of record of that you are going to be paying out, um, you know, depending on your payroll schedule, you want to have that as your system of record and keep to date.

You don't want to just be jotting something down on a piece of paper. You want to So you need to be able to have either a software to be able to help you keep those data elements and or, um, and or using some type of application that you can use personally within your own computer.

Mike: so you, you talked earlier about like states, they don't, they don't work other than say, Illinois, you don't have to give the employee level detail as part of your quarterly tax filing. You should assume that one day somebody is going to come a knocking and ask you to prove why you filed this correctly, right?

And so you, you've got to maintain all this detail. And if an IRS or a state revenue auditor or any auditors coming in, uh, because they think you have underpaid your taxes, it's going to go a lot further if you have proof in a system of record, a payroll system that shows all the debits, all the credits per employee, per pay period.

All that detail versus your handwritten notes or post it notes around your computer screen. Uh, so, so it sounds obvious, but that's, that's really, really important advice.

Janel Weinke: Yes, it does sound very obvious, but I think sometimes when, you know, you have other goals in mind, you think this is, I just, I paid my employees, I paid my employees. But it's very, very important that if you, if you're not using a tax software or payroll software to be able to store that information from you, that you keep your records very clean and up to date as possible.

Mike: so one other thing I want you to spend a little time on, and you talk about registering with these entities. So like I file for my federal ID, I'm like, Oh, I'm done. I got my, I got my EIN and I'm, and I'll use that forever now in this business. But not all states and locals are the same. A lot of times you have to, you have to register upfront with, say, a secretary of state to get a state IE perhaps.

Uh, uh, but sometimes these are annual renewal basis. So what would you say about that?

Janel Weinke: Yeah, so I think for when you're registering for like where your employees are working and where they live in, depending on those registrations and where your actual company is at, keep in mind that each agency, each each state agency does have a website. And so, um, sometimes you can just use the, your electronic device to be able to locate that specific agency website in order to register.

Use your electronic device as your friend to be able to locate the registration options for each of those states. By simply just, you know, going in by saying, I'm in the state of Florida and I need to register. Um, Florida Department of Revenue in this case. We'll provide you a link where you can call in and or, um, process it through your computer.

Some people just like to call and talk to people. They do have those options. You would be surprised. They still have those options where you can speak to someone and they can help you. Um, but you do want to make sure that when you register, you want to go into those specific agency websites. Each agency has their own website, um, that you can do process those, uh, registration processes.

And in most cases, you only register once, um, so you keep that in mind that you don't have to re register. The only time that you might need to re register is if the agency closes your account because you had no liability for like three consecutive time periods. So, the only time that potentially you may need to re register is if you didn't have liability for at least over a year.

Thank you very much

Mike: tax credits. So, uh, again, this is a deep ocean. We could spend an entire hour talking about different types and we could spend an hour on each one of them because they can be pretty complex. A lot of, a lot of employers don't realize That there are tax incentives for small businesses.

That are designed to put cash in their pocket to give them access to capital to grow their businesses or survive, survive and or grow their businesses and they come frequently. So there's certainly all kinds of other tax credits, but there's frequently tax credits that get processed on the employer payroll tax return, right?

It comes back saying the 941X that you apply for these things. Can you kind of let's maybe laundry list first? What are some of the big tax credits available to small businesses?

Janel Weinke: Yeah, so I think one of the biggest ones specifically that happened with COVID, um, the pandemic, one of the biggest credit I think that most small businesses are aware of, or even if you are a large business, is ERTC. And it probably gives you the feeling of, oh, I've heard enough of this. It's been, it's been that credit that I've heard a lot about, but ideally this credit that you could use is.

It's very specific for small business. It was to give the small business the opportunity to make sure that they were afloat to be able to still have a business during the pandemic. And then once the pandemic technically is over, um, that you can technically still be able to have those funds to be able to pay your employees, to be able to run your business.

And so, um, that is one of the credits that still exists that small businesses can use. Um, there is a lot of discussion with bills being passed and, um, timeframes on when you can submit your 941X to correct and show those times where employees met the specific thresholds, um, in order to meet that.

specific wages and so forth, and how many employees you have. But I don't want to go too much into that information, but I think that credit still exists for small businesses, and you can't, and it's, it's as simple as submitting a 941X, like you said, and that 941X is going to reduce your, um, the liability in order for you to get a very large credit from the IRS.

Now the time is almost coming up for the IRS for you to submit that to the IRS, but there's specific tax periods coming from 2020 that you can still amend today.

Mike: Yeah, I mean, I'll just take a second and kind of recap because, uh, so it's the ERTC, Employee Retention Tax Credit, tech credit that rewards small businesses for retaining employees. And this is a retroactive. So, uh, the way the law is written today, you have until April 15th to, uh, apply for tax credits going all the way back to 2020, the first year of the pandemic.

You have until April 15th of 2025 for 2021 retroactively. All that said, um, there are, there are qualification criteria. This isn't just a gift that everybody gets. Uh, I encourage you to hop on Assure's website, uh, fill out a form, talk to somebody who can take you through all the details to help you determine whether you do or don't qualify.

There's a bill. That passed the House of Representatives, uh, end of January. It's, uh, house Resolution HR 7 0 2 4. I, I know that because I Google it and look for status of it every day, but that Bill passed the House of Representatives that said the ERTC goes away on January 31st. That has not been even taken up by the Senate yet.

So at the time of this recording, the Senate has just come back into session. Proponents want to, want to get this on the floor for a vote. Uh, opponents want to open up to amendments and who knows what the heck's going to happen if that happens. Well, here's what we do know. We know if nothing changes that this thing goes away April 15th.

So if you haven't investigated whether you're eligible, well, you should, because if nothing changes, you have a very short window of time left here. Uh, to apply for those credits. Worst case scenario is this, uh, this HR 7024. Uh, and it's got all kinds of other stuff in it, you know, child tax credits and real estate credits, all kinds of other stuff in it, um, is, is, you know, pretty, pretty common with big, uh, uh, federal government packages.

Um, so who knows what's going to happen. Worst case scenario, this is going to retro, retro, uh, uh, effectively end January 31st, but it's not going to cost anything. There's no penalty. There's nothing wrong with submitting your application. So if you, if you haven't done it, I would, I would just encourage everybody to the, the, the punchline is this.

It could be, I think most people don't get qualified for quite this much, but it could be as much as 26, 000 per employee. So. It's potentially big money. Uh, find out if you qualify, if you haven't, uh, by all means, let us or somebody else that you trust, uh, get an application, but let's move on from ERTC. So, um, what, what are some of the other tax credits that employers need to know about?


Janel Weinke: many credits. I, I will tell you that, um, this is where I think the IRS also becomes your best friend, um, for providing you your expectations of what credits that small business owners can apply for. Um, And they actually release a very specific document on irs. gov that provides a list of all the credits that small business like so if you go to irs.

gov Oh yeah, so if you go to irs. gov and you literally just put in their search engine, um, small business credits, they are going to list out, there's probably, you know, over 50 credits that, um, that could be based on specific requirements of your business, what type of employees you are, what kind of business you are, that you can apply for.

I would highly encourage that you use that as a resource, um, because Every year around the December time frame, they will provide you upcoming credits that you can apply for. And they only, not only do they provide you a list of that, but they provide you a link to where, how you can apply for them. So that is really important that you.

Mike: I think people would be amazed how readable the IRS website is. They really go out of their way to try to make this easy to understand and put out, here's all the tech credits available to you.

Janel Weinke: Yeah, I would put a reminder on your calendar if I'm a small business owner, and I want to make sure that I know exactly, um, what I can be able to provide to my business, um, is to make sure to put a reminder on your calendar to state, I need to review iris. gov around to you. December timeframe to review exactly what credits I can apply for.

Cause there's so many and you could be a small business that has employees and this type of industry versus I have this many less employees or I have more, less than 50 employees. There's so many that you can apply for.


Mike: that I think that a lot of, uh, employers don't know about, uh, for different types of tax credits, uh, that, that, uh, that I kind of want to unpack, I'll, I'll even take the first one. The first one is the Secure Act 2.

0. Um, as you guys know, when social security, you know, first went into place. Uh, back, you know, in the early, uh, 20th century. I mean, we're, we're pushing 100 years ago at this point. Um, there was something like 16 workers to every 1 retiree and lifespan of a retiree wasn't anything like it is today. We're fast approaching 2 workers.

per retiree with much longer lifespans. The math doesn't work for retirement. So what the federal government has done is they're trying to put incentives in place for small business owners to put in place retirement plans, aka 401ks. And so the Secure Act 2.0 it's tax credits for employers to offer 401k plans to their employees.

In offsetting 100% of the setup and implementation fees for the first three years and a graduated scale that they'll even pay for the matching. So, uh, if, if you have a matching for your employees, they'll pay 100 100 75%, 50%, 25%. So graduated scale that for the first few years, you could offer 401k including a match to your employees.

Literally giving them, gifting them money. and it costs you 0 through a tax credit. So, federal government is definitely trying to incentivize business owners to offer 401k. So, remember that one, Secure Act 2.0 Um, a couple others, uh, uh, that I want you to maybe help unpack here for good, you know, WOTC.

It's W O T C. It stands for Work Opportunity Tax Credit. This would be maybe Not the federal government, maybe it's a city. They're trying to have a work opportunity zone. They're trying to revitalize the downtown and take, uh, and encourage jobs. So they want employers to move in, uh, into a new market. What could you tell us about WOTC tax credits?

Janel Weinke: Yeah, so you said it perfectly, the government is trying to encourage, um, employers, um, small businesses to go to these specific locations to really, um, have the market there that you can. Yeah. have employees there. And so for you to have specific employees in these specific locations, it actually can offer you a credit just to be able to have employees in that specific location.

And that's huge because that is, you know, sometimes you, you're also dependent on. where they want to bring money into, what cities they want to bring money into. And that is probably one of the things that I think companies or small businesses sometimes forget, um, that maybe going to a different location, a different part of the city, um, can provide you these credits by having the work done in that specific area.

Mike: That's right. That's right. Huge, huge opportunities to do good, revitalize, uh, communities. And so that's why A lot of times it's local, right? It's going to be a mayor, it's going to be a county, it's going to be a city municipality trying to revitalize an area, but a great way for you to participate in that revitalization and get all the way up including free labor, uh, paying people through tax credits, really good stuff.

Um, another one is R& D credits. I don't know how much you deal with R& D credits. This is starting to get a lot more news. It involves human beings doing work in, but, uh, the, you know, again, state and local municipalities trying to incentivize, uh, research and development, R& D. What, what, what are these types of tax credits?


Janel Weinke: if you have your small business and you need to do research and development within, um, within your company and within those specific locals and agent in specific states and so forth, or federal government. Is a credit you can also, um, be able to apply for. And I think it's important to remember those type of things as, uh, companies and or the governments looking for research to occur.

Remember, it's like research. They want you to do research and there is some criteria that you do need to make sure that you fall within the place when you're applying for these credits. Um, however, the biggest thing is it's, it's a re it's a research credit. And it's by, for your small business. So it is definitely one of the credits that I think that small businesses sometimes forget about.

Um, however, it is one of the easier credits though to, uh, get approval and get, and get some return money back to you pretty quickly.

Mike: what business owner doesn't want to grow their business, right? But investing in new growth initiatives, that's the hard part. It's coming up with the capital to do it. So, if you're running a thin margin business, your costs are going up, you're trying to grow revenue, but your costs are growing faster than your revenue.

You got this dip. Can you really afford the dip in cash flow to make the investment necessary in growth? That's exactly what these types of credits are for. You apply for tax credit, you get actual real dollars in your pocket to pay the people to do the research. And this could be, maybe it's a community that wants to be the next Silicon Valley.

Maybe it's a community that's really trying to develop a growth center around healthcare services. Right? Maybe it's a company that's a state or a city or a county that's really trying to grow biotechnology. So there's a lot of areas that municipalities are willing to pay businesses in the form of a tax credit to employ people to do R& D work.

And you would be the benefactor of the growth that could come from that. Any other big tax credits that you think people should know about here?

Janel Weinke: No, I think those are kind of a little bit more, but I'll leave it with make sure you mark your calendars. There's many credits out there for small business owners that the IRS list is out for you and they give you a lot of websites to go to. And so mark your calendars that comes out pretty much every year at the end of the year for what's upcoming for the new year.

Mike: Go to irs. gov. And again, you'll be shocked about how user friendly that website is for tax credits at the federal level. Other than that, Google is your friend, Google, employer tax credits in, and then the name of your state, the name of your city, the name of your county, whatever, or industry, there could be national, but industry wide.

So just Google is your friend here. Um, let's maybe just spend our last couple of minutes talking about deductions. This is an area where, where it comes to, now the deduction itself might not be a payroll tax. But it could have tax implications, right? Um, some deductions you take out pre tax, some deductions you take out post tax.

Where do you see employers get themselves in trouble with deductions as it relates to payroll taxes?

Janel Weinke: I, you know, one of the things where you can get in trouble for, um, is, is really not knowing when you need to be doing those deductions. So your post tax or, you know, or anything after the deductions are really important. You have. For small businesses, I think we talked about having 401k, um, having the, um, multiple deductions for benefits and also the deductions that, um, for your tax deductions.

And the things that employers in small businesses sometimes are unaware of is if you're a W 2 versus a 1099 employee, you, there's There's deductions for W 2s. And so if you've always been a 1099 company and you, that's how you did things, um, those are totally different than a W 2 when you have those W 2 employees.

And so a lot of companies can get in trouble on when you do your, um, not doing your deductions either at all, to be completely honest. But in some cases, you know, where those are important that you're doing your deductions based on everything that based on the payroll that you're processing and when you do those deductions.

So to keep in mind that when you're doing your deductions for your, when you're processing your payroll is making sure that what type of deduction you are reducing from the payroll that's being processed.

Mike: Yeah, um, maybe the last thing to touch on is garnishments. So you could have wages garnished from the federal government. Maybe you owe back taxes with the IRS. You could have garnishments in the form of Taxes, it could be child support, it could be you lost a lawsuit, it could be a fine, um, how should employers, I, this is an area that I, I just know firsthand talking to, to business owners, they, they cringe on this because.

Some of these notices come in, in, is this real? Is this fake? Is this a scam? Some person just walked into my, uh, my, my place of business and handed me a paper. Is this real? I feel like I'm in the, I'm invading the personal space of my employee. This is like, oh my gosh, I had no idea they got sued for that.

It's like this, this gets weird area for employers. So what's your, what's your guidance? For employers as they think about garnishments, how to receive them, how to process them, how to communicate them, how to take us through all that.

Janel Weinke: Yeah, so the, and that's a normal feeling to have, like, you know, you get those letters and you feel like they've given you too much information than you want to know. And immediately that feeling is, is this a valid thing? You have to remember, though, you also are required to Make sure that you are processing that garnishment when you receive it.

So you as a small business owner, you as a company can get in trouble if you don't process it. Um, when you receive that notification through the mail, through the, an email, um, or by the actual employee. Um, so it is important that you remember if you get. any notification that there is a garnishment such as a tax levy, um, you know, child support, um, a lawsuit.

Um, those are the probably the three common type of garnishments that you would see, um, that you keep in mind that you can get in trouble if you don't process in a timely manner. Now, if you feel that you don't know if it's 100 percent accurate and you're just trusting the word of the You don't have any supporting documentation, there's always going to be a number of the representative that is requesting the garnishment.

And that's important because if you are hearing it either by the employee, like maybe they have something they need to get. deducted from their bank account. They have to provide you the appropriate information in order to garnish those wages. And, um, it's important that if you don't have the appropriate supporting document, um, that you do get it from that individual employee, um, because you're going to need that, um, either if you're not using a third party such as Assure or you're processing it yourself, you're going to need that information on how to submit that.

Is it submitted through a check? Does that, does that garnishment want to check? Does it need to be submitted electronically? And you do need to have some type of, um, legal document of the garnishment stating what they need. And if you're questioning why the, is this a valid garnishment, there's always going to be a contact person, um, telephone number, email address, um, that directs you directly to them, and you can ask as many questions as you want.

Mike: Yeah, here's one that, as the employer, a lot of times, especially small businesses, you know, culturally, it might feel like family or you've worked with these people for a long time and okay, you know, this employee comes to me and this is child support or the result of a divorce and you personally know how great your employee is and you know how that dirty SOB on the other side of the equation, you know, You drag your feet or it's like, Oh, they're fighting this in court.

This isn't even resolved yet. I'll wait until this is done. Just cause you're probably overly involved in the details. You're breaking the law. If you do, you have to follow the law. And if, if this garnishment comes from, uh, a real government agency. They have authority. And if you have any question, contact them, do it in writing, do it on the phone, contact them, but you have to follow the law.

If it turns out that your employee is overpaying and they get this thing overturned, whatever the case is, then the. It's going to be reversed from the court and to the good and their, and their benefit later, but you don't get a choice to I'm going to help my employee out. I'm just going to pretend I didn't get this.

You are going to be the one that's accountable to us.

Janel Weinke: Yep, yep, that is true. And if you do get something that you don't hear directly from the employee, um, you are required to notify the employee that you're going to be, you received a garnishment and that you should, that you let them know what, what, um, the garnishment entails. Cause just keep in mind that if you received that letter in the mail, also, so did the employee.

Um, and so they do have that information, but. Again, sometimes who opens mail and things like that, but you are required to notify the employee that you did receive a garnishment and that you would be taking the action.

Mike: And you know what? That's a really good point. So, so let's say you're a small ish business. Maybe you're not big enough yet. You have dedicated HR staff. Maybe you have a front desk employee or a receptionist at your retail business that opens the mail for you. You, you might want to set good policy procedure here that this is the type of mail that you are to open for me.

This is the type of mail that you're not. Because it's, it may be nobody's damn business that so and so just got garnished for X, Y, Z. And so certain things really do need to belong to either a certified HR professional or a senior leader who's trained or an owner who's trained knowing how to discreetly and privately handle these matters. All right, I know we're at time. Any broad sweeping statements? I'd be curious. Last general question, Janelle. What do you see just the trajectory of payroll tax? What is kind of the macro trends that you see happening that business owners need to understand about the direction of tax? Getting harder, getting easier, getting simpler?

What are the macro trends here?

Janel Weinke: Overall, I think if you're a small business or an employee, an employer in general, um, the trends that we've seen is that, um, really it's, it's, it's not hard, um, and there's a lot of resources out there just like Assure, um, and hopefully you read and you listen to us today with everything that you can take and learn from this to add to your business.

But there is a lot of resources out there, um, for small businesses to be able to understand what is required for payroll taxes. And, um, you know, your electronic device is your best friend. Um, but really it's not hard. I can probably guarantee you that payroll tax is not hard. We make it hard when we don't follow the rules and guidelines.

So, um, it's the, it's the extra thing that you have to do, but it's not extra when it's just within your process and you're making sure that you have a really great schedule and also understand that there's a sure, there's a lot of companies that are willing to help you to be able to take that burden off of your company.

Mike: Janelle, enjoyed it very much. I learned a ton. Thanks for joining me today.

Janel Weinke: Oh, no problem, Mike. You have a great day.

Mike: Yeah. And to everybody else, thanks for joining today. Uh, hopefully you enjoyed it. Uh, if you got value from today's conversation, if you think a friend or a colleague might get value from this conversation, I invite you to forward it, to like, to comment, listen on your podcast platform of choice on our website, YouTube, uh, or anywhere in social media until next week.

Thanks again, Janelle.

Janel Weinke: Thank you. Bye everyone.

Mike: Bye everyone.

Creators and Guests

Mike Vannoy
Mike Vannoy
Mike is a digital-first marketing executive with 25 years dedicated to helping HR companies thrive. As a board member of an AI software company and Chief Marketing Officer at Asure, he's been at the forefront of AI, HR compliance trends, and the changing demographics that shape today's marketplace. Under his leadership at Sales Engine Media, the company predominantly focused on the payroll, HR, and benefits industries, earning multiple spots on the Inc5000 list. Actively involved in multiple small businesses, Mike is a lifelong entrepreneur adept at navigating the changing workforce dynamics. He has held multiple executive roles at industry-leading HR firms, showcasing his expertise and leadership in the sector.
Tax Filing, Deductions, Credits & Changes: Tax Compliance Considerations for Small Business Owners - Mission to Grow - Episode #91
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